Ford will disclose product cuts later this year

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Ford Motor will disclose details later this year of its investment shift to SUVs and crossovers from passenger cars.

On Jan. 17, Ford said it will scale back its car offerings and offer far fewer iterations of models that survive as it seeks to become leaner and nimbler, and improve profit margins.

Reporting fourth-quarter and 2017 earnings Wednesday CEO Jim Hackett declined to offer more details to frustrated analysts, saying only that he would share details later this year. Ford is currently looking into where the biggest opportunities are, he said.

Executives have said that Ford is implementing business practices focused around Hackett’s mantra of “smart vehicles for a smart world.” This includes $ 14 billion in costs cuts, simplifying orderable products, and tailoring its model lineup to higher-margin segments for different parts of the world.

The investment shift means Ford will focus on performance SUVs and “authentic off-roaders” where the automaker can get higher profits, Jim Farley, president of global markets, said earlier this month.

Ford expects its utility-vehicle mix will increase 10 percentage points over the next couple of years, while its car portfolio will shrink about 10 percentage points, the company said on Jan. 17.

On Wednesday, Chief Financial Officer Bob Shanks said that Ford isn’t as fit as its peers, and that is stopping it from achieving its desired profit margins of around 8 percent. Ford’s 2017 pretax profits fell 19 percent to $ 8.4 billion, reducing its operating profit margin to 5 percent from 6.7 percent in 2016.

Fourth-quarter adjusted pretax profits fell 19 percent to $ 1.7 billion due to higher steel and aluminum prices, as well as adverse currency rates. In Europe, Ford’s pretax profit slid 66 percent to $ 56 million in the fourth quarter and fell 81 percent to $ 234 million for 2017. Most of the full-year drop was attributed to Brexit-related charges, as well as higher commodity and warranty costs.

Shanks said Ford’s revenue will be bolstered by the launches of 23 new vehicles globally this year, up from 11 last year. Ford’s key upcoming launch in Europe is the new Focus compact hatchback, which arrives later this year.

Ford is also preparing an ambitious plan to roll out robot taxis and driverless delivery vehicles by 2021.

Reuters and Bloomberg contributed to this report

You can reach Nick Gibbs at ngibbs@crain.com.


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